Investors send stocks down on global concerns

TORONTO — North American stock markets closed sharply lower Monday as investors south of the border mulled the increased odds of a Federal Reserve rate hike following last week’s strong U.S. jobs data.

The Toronto Stock Exchange’s S&P/TSX index gave back 70.68 points at 13,482.62, while the Canadian dollar was at 75.33 cents U.S., up 0.12 of a cent from Friday’s close.

In New York, the Dow Jones average of 30 stocks was down 179.85 points at 17,730.48, the broader S&P 500 index declined 20.62 points to 2,078.58 and the Nasdaq lost 51.82 points to 5,095.30.

That followed Friday’s better-thanexpected employment report, which showed the U.S. economy added 271,000 jobs in October and left many investors expecting a December interest rate hike from the Fed.

Norman Raschkowan, senior partner at Sage Road Advisor, said given the lack of economic news, investors may be acting on general concerns about lagging global economic growth. “In the U.S. people are taking some profits today after what’s been a pretty good few weeks, and that’s just setting a negative tone for the other major markets,” Raschkowan said.

Meanwhile, earnings results from Canadian companies have been lacklustre thus far, Raschkowan said.

“There haven’t been a lot of companies that you could really say, ’Wow, those are great results,”’ Raschkowan said. “They’ve either been OK or actually disappointing.”

One bright spot on Monday was the gold sector of the TSX, which climbed nearly three per cent following a small increase in the price of the precious metal.

After hitting a three-month low Friday, the December gold contract rose $0.40 to US$1,088.10 an ounce on Monday, a move that Raschkowan said likely relates to the slight decline in the value of the U.S. dollar. “The price of gold is usually denominated in U.S. dollars, but people view it as a more stable store of value,” Raschkowan said.

“So if the dollar has gone down in value, the gold should still be worth the same, so in terms of the number of dollars it should go up. They just tend to move inversely with each other over long periods of time — not usually on a day-to-day basis, but over longer periods there’s definitely a relationship there.”

Meanwhile, the December crude contract fell by 42 cents at US$43.87 a barrel, the December contract for natural gas was down seven cents at US$2.30 per mmBtu and copper rose a penny to US$2.23 a pound.

Shares of Quebec-based Valeant Pharmaceuticals International climbed 3.7 per cent, or $4.05, to $113.24 as the embattled drugmaker announced it will provide an operational update today.

Canadian Natural Resources to sell holdings

CALGARY — Canadian Natural Resources is selling most of its royalty land holdings to PrairieSky Royalty for $1.8 billion in stock and cash as it looks to strengthen its balance sheet in the face of low oil prices.

The friendly deal would see CNRL transfer 81 per cent of its royalty volume to PrairieSky, consisting of the equivalent of 6,700 barrels per day of oil and natural gas production, and about 21,850 square kilometres of royalty land — nearly four times the size of Prince Edward Island.

Under the deal, PrairieSky would pay $680 million in cash and about 44.4 million of its common shares, priced at $25.20 each, for the royalty portfolio.

The deal follows Cenovus Energy’s sale of its royalty business for $3.3 billion in June to the Ontario Teachers’ Pension Plan as the company sought to shore up its finances.